Amazing Progress on Unemployment Claims
By David Henderson
An amazing statistic came out earlier this week, one that CNBC remarked on but still, in my view got too little attention. Here’s the report from CNBC:
The number of Americans filing applications for unemployment benefits dropped to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth.
Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said on Thursday.
That’s way more amazing than the low 3.8 percent unemployment rate reported this morning. The reason is that 3.8% is a percent of the labor force, but the 202,000 number for initial claims for unemployment benefits is an absolute number. Has anything happened to the number of workers in the U.S. economy since December 1969? Well, yes. It has more than doubled, from 71.2 million to 150.8 million.
So as a percent of the number of people employed, the 202,000 is less than half of the percent for December 1969. On December 6, 1969, it bottomed out at the same level: 202,000. That’s real progress.
Now, you might argue that that number reflects the low unemployment rate today, compared to December 1969 when the unemployment rate was higher. But you would be wrong. The unemployment rate then was 3.5%. But even if the unemployment rate had been higher, don’t forget the most important fact: the number of people employed is double what it was then.
You also might argue that the relatively low number of initial claims for state unemployment benefits is due to the fact that a smaller percent of the labor force qualifies for unemployment benefits. I don’t know if that’s true. If it is, I think that’s good too. Compulsory government-run unemployment insurance is a bad idea. But that’s a longer discussion.